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Fizz of discontent over Karnataka `sops' to Coke

Our Bureau

MANGALORE, Dec. 24

IN the context of the plummeting prices of tender coconuts and the `crisis' affecting `indigenous' small soft drink manufacturers, a controversy is once again emerging around the various `incentives', `concessions' and `facilities' given to multi-nationa l corporations in the era of globalisation.

The issue, which has begun to be raised here as it is widely felt that such sops encourage `monopolisation', concerns the `patronage' given to Coca-Cola for its Rs 116.5-crore plant at Bidadi as part of the Karnataka Government's industrial policy which provides for the granting of `incentives and concessions' to `mega-projects' with an investment of over Rs 100 crore on a `case-to-case basis'.

As per the information available here, this story goes back to November 1998 when Coca-Cola asked the Karnataka Government for 15 acres of land in the Bidadi industrial area, 2,900 kVA of power, 2,000 cu.m of water per day, sales tax exemption for 12 yea rs up to 200 per cent of its capital investment, supply of free water for an initial period of five years, subsidy for capital expenditure with regard to power supply, and additional land for the development of a green belt.

A `high-level committee' set up for such proposals by the State Government on March 2, 1999, recommended an `incentive package' for Hindustan Coca-Cola Bottling Southwest India Pvt Ltd which exempted the company from sales tax for a period of eight years or `deferment' for a period of 10 years subject to a limit of 150 per cent of the fixed investment, and exemption from the Karnataka Sales Tax Act for purchase of capital goods/equipment from a registered dealer within the State costing Rs 1 crore and a bove during the construction phase of the project. A formal Government order approving the project and granting the infrastructural facilities, incentives and concessions was issued on June 3, 1999.

Coca-Cola, however, was dissatisfied with these concessions and, on June 14, 1999, sought exemption from payment of entry tax on raw materials and consumables as also on capital goods. The State Government, in a modified order of June 6, 2000, agreed to exempt the company from the payment of entry tax for a period of eight years with an overall ceiling of 150 per cent of its fixed assets.

Further, on October 6, 2000, the North West Karnataka Road Transport Corporation issued a notification calling for tenders seeking `exclusive selling rights' of aerated beverages at bus stands under its jurisdiction which, it is being alleged, was done f or the `benefit' of Coca-Cola. The Karnataka State Road Transport Corporation has, however, subsequently denied that the rights were given to Coca-Cola and has claimed that the tender was `cancelled', ostensibly since there was `no response.'